“We’ve once again seen solid revenue growth led by continued strong
adoption by home medical equipment providers turning to portable oxygen
concentrators,” said Chief Executive Officer Raymond Huggenberger. “We
continue to demonstrate that we are not only providing the best in class
portable oxygen concentrators to our patients, but also helping our
business-to-business customers improve their cost basis in the face of a
challenging reimbursement climate.”

Fourth Quarter 2016 Financial Results

Total revenue for the three months ended December 31, 2016 rose 25.7% to
$50.9 million from $40.4 million in the same period in 2015. Domestic
business-to-business sales exceeded expectations and grew 69.0% over the
same period in 2015, primarily driven by traditional home medical
equipment provider purchases and the continued strength of our private
label partner. International business-to-business sales in the fourth
quarter of 2016 also exceeded expectations, growing 42.2% over the
comparative period in 2015, primarily due to success with our large
partners in Europe and the addition of a new customer in South Korea.
Direct-to-consumer sales rose 34.2% over the same period in 2015,
approximately in line with expectations. Rental revenue decreased 28.3%
from the same period in 2015, primarily due to the declines in Medicare
rental reimbursement rates, continued declines in private-payor rates
due to the lower Medicare rates, and a continued focus on sales versus
rentals, partially offset by the one-time benefit of $2.0 million
associated with the 21st Century Cures Act, which is expected
to be non-recurring and retroactively increased the reimbursement rates
in certain Medicare regions for the second half of 2016. Rental revenue
declined to 16.2% of total revenue in the fourth quarter of 2016 from
28.4% of total revenue in the fourth quarter of 2015.

Gross margin was 48.5% in the fourth quarter of 2016 versus 49.5% in the
comparative period in 2015. Sales gross margin was 49.9% in the fourth
quarter of 2016 versus 48.0% in the fourth quarter of 2015. Sales
gross margin improved primarily due to lower cost of goods sold per unit
associated with the upgraded Inogen One G3 and the Inogen One G4,
partially offset by an increase in sales mix toward lower margin
business-to-business sales as volumes in these channels increased
worldwide. Rental gross margin was 41.4% in the fourth quarter of 2016
versus 53.4% in the fourth quarter of 2015, primarily due to lower net
revenue per rental patient as a result of reimbursement rate reductions,
partially offset by the non-recurring $2.0 million benefit from the 21st
Century Cures Act and lower cost of rental revenues associated with
lower depreciation and servicing costs per patient.

Total operating expense increased to $18.5 million in the fourth quarter
of 2016 versus $16.6 million in the fourth quarter of 2015 as the
Company continued to make strategic investments in additional personnel
and incurred increased patent defense legal costs. Total operating
expense as a percentage of revenue decreased to 36.4% in the fourth
quarter of 2016 from 41.0% in the fourth quarter of 2015.

Operating expense included research and development expense of $1.2
million in the fourth quarter of 2016, which was consistent with $1.2
million in the comparative period in 2015. Sales and marketing expense
was $9.3 million in the fourth quarter of 2016 versus $8.7 million in
the comparative period in 2015, primarily due to increased media expense
and salesforce additions. General and administrative expense was $8.0
million in the fourth quarter of 2016 versus $6.6 million in the
comparative period in 2015, primarily due to increased personnel-related
expenses and patent defense legal costs.

During the fourth quarter of 2016, the Company elected to early adopt
Accounting Standards Update (ASU) 2016-09 ahead of the mandatory 2017
effective date for all U.S. public companies. On March 30, 2016, the
Financial Accounting Standards Board issued ASU 2016-09, Improvements to
Employee Share-Based Payment Accounting, which simplifies the accounting
for share-based payment transactions, including the income tax
consequences. The impact of the adoption is favorable for full year 2016
and is expected to be favorable for 2017. The adoption led to a decrease
in provision for income taxes of $6.0 million in full year 2016 (see
accompanying table for recast of the prior quarters net income and
related earnings per share).

Net income for the fourth quarter of 2016 increased 36.3% to $5.3
million from $3.9 million in the fourth quarter of 2015, or $0.25 per
diluted common share compared to $0.19 in the fourth quarter of 2015. In
the fourth quarter of 2016, Inogen’s effective tax rate was 9.8%
compared to negative 16.3% in the fourth quarter of 2015. Excluding the
$1.7 million decrease in provision for income taxes associated with the
adoption of ASU 2016-09, Inogen’s fourth quarter 2016 effective tax rate
would have been 39.7%. In the fourth quarter of 2015, Inogen’s effective
tax rate of negative 16.3% was primarily due to the tax benefit
adjustments of $1.0 million, which were mainly related to a decrease in
the valuation allowance related to California net operating losses. In
addition, the effective tax rate in the fourth quarter of 2015 was
impacted by an increase in equity compensation deductions and benefits
associated with the federal research and development tax credit and the
timing of stock dispositions in the fourth quarter of 2015.

Adjusted net income in the fourth quarter of 2016 increased 85.0% to
$5.3 million from $2.8 million in the fourth quarter of 2015. Adjusted
net income in the fourth quarter of 2016 did not include any
non-recurring tax benefit adjustments, compared to $1.0 million of tax
benefit adjustments in the fourth quarter of 2015 but it did include a
$1.7 million reduction in provision for income taxes associated with ASU
2016-09.

Adjusted EBITDA for the three months ended December 31, 2016 rose 34.4%
to $10.9 million from $8.1 million in the fourth quarter of 2015.

Cash, cash equivalents, and marketable securities were $113.9 million as
of December 31, 2016, compared to $108.3 million as of September 30,
2016, an increase of $5.5 million in the fourth quarter of 2016. This
compares to $82.9 million of cash, cash equivalents, and marketable
securities as of December 31, 2015, an increase of $31.0 million in full
year 2016.

Financial Outlook for 2017

Inogen is increasing its 2017 revenue guidance to a range of $233 to
$239 million, which represents year-over-year growth of 14.9% to 17.8%.
This compares to the previous revenue expectation of $230 to $236
million. The Company expects direct-to-consumer sales to be its fastest
growing channel, followed by domestic business-to-business sales to be
its second fastest growing channel, and international
business-to-business sales to be its third fastest growing channel,
where the strategy will continue to be heavily focused on the European
markets. Inogen expects rental revenue to continue to decline in 2017
compared to 2016 based on lower average rental revenue per patient
primarily due to the known cuts from Medicare competitive bidding,
continued reductions of private insurance and Medicaid rates, and a
continued focus on sales versus rentals.

Inogen is also increasing its full year 2017 net income and Adjusted net
income guidance to $21 to $23 million, representing 2.3% to 12.1%
year-over-year growth. This compares to the previous guidance range of
$16 to $18 million. Inogen estimates that the adoption of ASU 2016-09
will lead to a decrease in provision for income taxes of approximately
$5.0 million in 2017 based on forecasted stock activity, which will
lower our effective tax rate. Excluding the $5.0 million decrease in
provision for income taxes expected in 2017, the Company expects an
effective tax rate of approximately 37%. After giving effect to ASU
2016-09, the Company expects an effective tax rate including stock
compensation deductions to vary quarter to quarter depending on the
amount of pre-tax net income and on the timing and size of stock option
exercises.

Inogen is also increasing its guidance range for full year 2017 Adjusted
EBITDA to $46 to $50 million, representing 6.0% to 15.2% year-over-year
growth. This compares to the previous guidance range of $45 to $49
million.

Inogen continues to expect net positive cash flow for 2017 with no
additional equity capital required to meet its current operating plan.

Conference Call

Individuals interested in listening to the conference call today at
1:30pm PT/4:30pm ET may do so by dialing (855) 427-4393 for domestic
callers or (484) 756-4258 for international callers. Please reference
Conference ID: 59665587. To listen to a live webcast, please visit the
Investor Relations section of Inogen's website at: http://investor.inogen.com/.

A replay of the call will be available beginning February 28, 2017 at
4:30pm PT/7:30pm ET through 4:30pm PT/7:30pm ET on March 1, 2017. To
access the replay, dial (855) 859-2056 or (404) 537-3406 and reference
Conference ID: 59665587. The webcast will also be available on Inogen's
website for one year following the completion of the call.

Inogen has used, and intends to continue to use, its Investor Relations
website, http://investor.inogen.com/,
as a means of disclosing material non-public information and for
complying with its disclosure obligations under Regulation FD. For more
information, visit http://investor.inogen.com/.

About Inogen

Inogen is innovation in oxygen therapy. We are a medical technology
company that develops, manufactures and markets innovative oxygen
concentrators used to deliver supplemental long-term oxygen therapy to
patients suffering from chronic respiratory conditions.

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, among others, statements regarding anticipated growth
opportunities; expectations that rental revenue will continue to decline
due to reductions in Medicare and private payor reimbursement rates;
expectations of growth in the direct-to-consumer, business-to-business
and international sales channels; the expected impact of ASU 2016-09;
and financial guidance for 2017, including revenue, net income, Adjusted
EBITDA, Adjusted net income, net cash flow, effective tax rates and tax
benefit adjustments, and the need for equity financing. Forward-looking
statements are subject to numerous risks and uncertainties that could
cause actual results to differ materially from currently anticipated
results, including but not limited to, risks arising from the
possibility that Inogen will not realize anticipated revenue; the impact
of reduced reimbursement rates, including private payor reductions and
reductions in connection with competitive bidding and the Center for
Medicare and Medicaid Services (CMS) rules; the possible loss of key
employees, customers, or suppliers; and intellectual property risks if
Inogen is unable to secure and maintain patent or other intellectual
property protection for the intellectual property used in its products.
In addition, Inogen's business is subject to numerous additional risks
and uncertainties, including, among others, risks relating to market
acceptance of its products; its ability to continue its Inogen One G4
product rollout; competition; its sales, marketing and distribution
capabilities; its planned sales, marketing, and research and development
activities; interruptions or delays in the supply of components or
materials for, or manufacturing of, its products; seasonal variations;
unanticipated increases in costs or expenses; and risks associated with
international operations. Information on these and additional risks,
uncertainties, and other information affecting Inogen’s business
operating results are contained in Inogen’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2016, and in its other filings
with the Securities and Exchange Commission. Additional information will
also be set forth in Inogen’s Annual Report on Form 10-K for the year
ended December 31, 2016 to be filed with the Securities and Exchange
Commission. These forward-looking statements speak only as of the date
hereof. Inogen disclaims any obligation to update these forward-looking
statements except as may be required by law.

Use of Non-GAAP Financial Measures

Inogen has presented certain financial information in accordance with
U.S. GAAP and also on a non-GAAP basis for the three and twelve months
ended December 31, 2016 and December 31, 2015. Management believes that
non-GAAP financial measures, taken in conjunction with U.S. GAAP
financial measures, provide useful information for both management and
investors by excluding certain non-cash and other expenses that are not
indicative of Inogen's core operating results. Management uses non-GAAP
measures to compare Inogen's performance relative to forecasts and
strategic plans, to benchmark Inogen's performance externally against
competitors, and for certain compensation decisions. Non-GAAP
information is not prepared under a comprehensive set of accounting
rules and should only be used to supplement an understanding of Inogen's
operating results as reported under U.S. GAAP. Inogen encourages
investors to carefully consider its results under U.S. GAAP, as well as
its supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand its business.
Reconciliations between U.S. GAAP and non-GAAP results are presented in
the accompanying table of this release. For future periods, Inogen is
unable to provide a reconciliation of non-GAAP measures without
unreasonable effort as a result of the uncertainty regarding, and the
potential variability of, the amounts of interest income, interest
expense, depreciation and amortization, stock-based compensation,
provisions for income taxes, and certain other infrequently occurring
items, such as acquisition related costs, that may be incurred in the
future.

Balance Sheet

(unaudited)

(amounts in thousands)

December 31,

2016

2015

Assets

Current assets

Cash and cash equivalents

$

92,851

$

66,106

Marketable securities

21,033

16,793

Accounts receivable, net

30,828

19,872

Inventories, net

14,343

8,648

Deferred cost of revenue

398

397

Income tax receivable

433

2,158

Prepaid expenses and other current assets

1,659

870

Total current assets

161,545

114,844

Property and equipment, net

25,199

30,680

Intangible assets, net

241

229

Deferred tax asset - noncurrent

26,654

15,464

Other assets

410

97

Total assets

$

214,049

$

161,314

Liabilities and stockholders' equity

Current liabilities

Accounts payable and accrued expenses

$

12,795

$

12,867

Accrued payroll

6,123

5,271

Current portion of long-term debt

—

315

Warranty reserve - current

1,688

1,226

Deferred revenue - current

2,239

2,323

Income tax payable

—

11

Total current liabilities

22,845

22,013

Warranty reserve - noncurrent

1,792

747

Deferred revenue - noncurrent

7,042

4,199

Other noncurrent liabilities

282

337

Total liabilities

31,961

27,296

Stockholders' equity

Common stock

20

20

Additional paid-in capital

194,466

179,143

Accumulated deficit

(12,363

)

(45,108

)

Accumulated other comprehensive loss

(35

)

(37

)

Total stockholders' equity

182,088

134,018

Total liabilities and stockholders' equity

$

214,049

$

161,314

Statements of Comprehensive Income

(unaudited)

(amounts in thousands, except share and per share amounts)

Three months ended

Twelve months ended

December 31,

December 31,

2016

2015

2016

2015

Revenue

Sales revenue

$

42,604

$

28,943

$

168,170

$

113,625

Rental revenue

8,247

11,503

34,659

45,380

Total revenue

50,851

40,446

202,829

159,005

Cost of revenue

Cost of sales revenue

21,330

15,052

85,154

61,553

Cost of rental revenue, including depreciation of $2,696 and
$3,036 for the three months ended and $11,429 and $11,965 for the
twelve months ended, respectively

4,833

5,356

20,365

21,194

Total cost of revenue

26,163

20,408

105,519

82,747

Gross profit

24,688

20,038

97,310

76,258

Operating expense

Research and development

1,216

1,226

5,113

4,180

Sales and marketing

9,320

8,746

37,540

31,369

General and administrative

7,981

6,592

31,793

25,658

Total operating expense

18,517

16,564

74,446

61,207

Income from operations

6,171

3,474

22,864

15,051

Other income (expense)

Interest expense

—

(4

)

(6

)

(22

)

Interest income

70

36

196

102

Other expense

(407

)

(189

)

(329

)

(404

)

Total other expense, net

(337

)

(157

)

(139

)

(324

)

Income before provision (benefit) for income taxes

5,834

3,317

22,725

14,727

Provision (benefit) for income taxes

574

(541

)

2,206

3,142

Net income

$

5,260

$

3,858

$

20,519

$

11,585

Other comprehensive income (loss), net of tax

Unrealized gain (loss) on foreign currency hedging during the period

79

(14

)

55

(14

)

Add: reclassification adjustment for gains (losses) included in net
income

(45

)

—

6

—

Total unrealized gain (loss) on foreign currency hedging

34

(14

)

61

(14

)

Unrealized loss on available-for-sale investments during the period

(75

)

(23

)

(59

)

(23

)

Total other comprehensive income (loss), net of tax

(41

)

(37

)

2

(37

)

Comprehensive income

$

5,219

$

3,821

$

20,521

$

11,548

Basic net income per share attributable to common stockholders
(1)

$

0.26

$

0.20

$

1.02

$

0.60

Diluted net income per share attributable to common stockholders
(1)

$

0.25

$

0.19

$

0.97

$

0.56

Weighted-average number of shares used in calculating net
income per share attributable to common stockholders:

Basic common shares

20,310,857

19,689,662

20,067,152

19,398,991

Diluted common shares

21,362,513

20,812,773

21,095,867

20,708,170

(1) Reconciliations of net income attributable to common
stockholders basic and diluted can be found in Inogen’s Annual
Report on Form 10-K to be filed.

2 Consists of a patent litigation settlement benefit
partially offset by a litigation expense associated with a labor
law class-action lawsuit that was accrued in the first quarter of
2016 and paid in the fourth quarter of 2016.

3 Tax benefit adjustments related to the release and
adjustment of the valuation allowances associated with the net
operating loss carryforwards for the quarter ended and for the
year ended December 31, 2015.

Recast of the prior quarters net income and related earnings
per share